RBNZ warns Westpac for failing to report 8,000 transactions

  • By Elizabeth Fry

New Zealand’s central bank has issued a formal warning to Westpac’s New Zealand business for failing to report almost 8,000 transactions as required under anti-money laundering and counter-terrorism laws. 

The Reserve Bank of New Zealand said banks are required to report transactions - including international wire transfers- of NZ$1000 or more to the police’s financial intelligence unit The RBNZ said Westpac configured its prescribed transaction reporting systems in a way that failed to detect and report all eligible international wire transfers.  

Further, the central banks said Westpac's New Zealand subsidiary failed to report corporate transactions to overseas recipients between July 2018 and February 2019. That said, other procedures and controls at the bank were "satisfactory". 

“This formal warning reflects the importance of the prescribed transaction reporting regime in building an intelligence picture across New Zealand’s financial system and reiterates the seriousness with which we view non-compliance with the AML/CFT Act,” deputy governor Geoff Bascand said in a release. 

The formal warning followed the release of findings from its survey of all New Zealand registered banks’ correspondent banking, prescribed transaction reporting, and transaction monitoring. 

The survey was launched in the wake of allegations made by Australia’s financial crime regulator Austrac against Westpac in November 2019. 

Survey insufficient 

Based on the survey responses received by the RBNZ, all banks surveyed appeared to have adequate processes and controls for correspondent banking due diligence, prescribed transaction reporting, and transaction monitoring regarding potential child exploitation. 

However, the survey also found that an assessment of the effectiveness of these procedures and controls could not be determined from the survey alone and going forward this will be covered as part of the Reserve Bank on-site inspection program. 

“The survey was a useful exercise to better understand current compliance with the Act by registered banks and will inform our more intensive supervisory approach,” Bascand added.